Job growth rebounded strongly in March, allaying concerns that a February slowdown was signaling the possibility of extended economic weakness.
Nonfarm payrolls rose 196,000 in March, beating consensus estimates of 177,000. As shown in the LPL Chart of the Day, average yearly gains have remained largely steady. Overall the labor market remains robust for this point in the cycle, with no apparent sign of the rapid slowing that has often occurred before the onset of a recession.
“Today’s numbers confirm that February labor weakness was temporary,” said LPL Research Chief Investment Strategist John Lynch. “Labor market strength remains a bright spot in the U.S. economy, and wages are growing at a healthy pace.”
Average hourly earnings grew 3.2% year over year, slowing modestly but remaining at a level that should continue to bolster consumer confidence and support consumer spending. Wages have been one of the most telling job-market indicators to us, as year-over-year average hourly earnings growth historically has reached 4% before it threatened economic output due to added inflationary pressure. The current rate of growth should give the Federal Reserve (Fed) plenty of leeway to continue to take a wait-and-see approach on interest rates.
The unemployment rate held steady at 3.8%, near a cycle low. The labor force participation rate dipped slightly to 63%, but remained near recent highs.
Initial jobless claims fell to a 49-year low through last week, showing that unemployment continues to decline amid solid hiring conditions. While most labor-market data serve as lagging indicators of U.S. economic health, jobless claims are a leading indicator. Historically, a 75–100K increase in claims over a 26-week period has been associated with a recession.
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